US offices are sitting empty – business owners will have to adapt
theguardian.com
theguardian.com
…But I do enjoy these in-office days for what they make up for in remote work: Face to face chats; Real time human bonding; A sense of place. The office is just a socially accepted excuse to get everyone out of their homes and together for a few hours.
I’m especially grateful that our cofounders understand why we should actually be at the office, and that any expectation of “being more productive” is nothing more but a polite fiction. Ironically, our two days in the office are mostly spent just outside the building. Technical chats over lunch, 1 on 1 meetings as a walk around the neighborhood, and drinks in the evening. That’s what hybrid should be. I’ll send my pull requests at 3 am while in my comfy chair at home.
As for the commercial real estate market, I truly believe they’re fucked in the long run. There aren’t enough jobs like my Montessori arrangement that justify all the buildings in their portfolio. Hell, we couldn’t even go back to full-office because our team is so distributed!
Personally, I think this is commodification coming back to bite short-term economics applied to financial districts. We don’t need a Chipotle on every corner. We don’t need another $20 box salad store.
We need neighborhoods that people want to be in for reasons other than work!
I’m guessing that in the coming months there’s gonna be talks of a real estate bailout. Investors have entwined their holdings into everyone’s retirement plans, and will no doubt appear on the nightly news wearing a vest made out of dynamite. They will threaten to take us all down with them.
Such a shame that they’ve over-leveraged their position. Did they forget that we already have nothing to lose? The irony will be lost on them.
These are the only types of business that can afford the rents though. Even if you get another lower cost place in there, they have to cut corners on quality and end up going out of business or just being really bad food. How do you overcome that?
People are downvoting me, but not really understanding what I'm saying. Even if there is more empty space, what is happening is that landlords are leaving them empty, which keeps the rents higher because there is still limited effective availability. They aren't going to rent to a small business because they don't want to get locked into a 5-10 year lease on a small business when they can potentially wait a bit and rent to a larger business who will pay more and likely survive longer.
Retail rent will fall because nobody is in the offices. Retail business will close because of less traffic, and thus there will be more space.
But, retail leases are typically 5-10+ years. Why would a landlord lower the rent now to a small business and get stuck in a long lease, when they don't know if the office space will recover and the big businesses will want to come back?
It is a game of chicken.
Also, at the beginning of Covid, several big businesses just refused to pay retail rent as a negotiating tactic. It would not surprise me if that happens again.
"Why would a landlord lower the rent now to a small business"
now.
> After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants
the fact that some people let some buildings sit empty for some time doesn't mean most will let most sit empty for most of the time
after all, the next best alternative for building owners is foreclosure or abandonment or sale at a loss, the next best alternative for businesses is 1 of a thousand different places, or just a remote workplace
They might not have the choice. Nobody is going to rent ground floor retail space in an area with no foot traffic. It is a race to zero all around.
of course they will, at a low enough rent, obviously, which is the point: lowering rent is indeed a choice, as is going bankrupt, abandoning the property, foreclosure, or selling it at whatever price
let the owner rent it for a dollar a month and we'll see if it gets rented
the owner probably wants a billion dollars and a pony, too, but what they can have are the options I listed
the reason they don't have tenants is because their asking rent is too high and demand is low
in capitalism, that means they should lower rent
as I said: capitalism
instead of trying to make the conversation about me or you, and instead of citing maybe-true singular anecdotes which don't prove your case (that space is limited, and lowering rent won't increase rentors), try just presenting the aggregate data showing that commercial landlords en masse have lowered rent to a dollar and still have these vacancies
WAIT!!!
Wait.
I fear what you heard was, "argue about your anecdote some more", but what I said was, show us the data
The under taxation of land results in land owners squatting on it without doing anything that society benefits from.
The problem is that would mean that the valuation of the real estate would need to change, which would imply debt repayment, and given higher interest rates: default or finance under onerous terms or being cash rich already.
At the end (as the Fed expects): defaults => lower real estate value ^ rents => cheaper food options.
And that is where usually executive is going to come in to save Government Supported Real Estate (GSE), and throw a wrench to Feds approach.
tl;dr: the government supports this situation it will come to make it worse once again /s.
It will lower itself naturally.
Less people in office buildings means less foot traffic to stores, which means less fewer stores will be enticed to rent.
If nobody's renting, eventually the owners and investors will have to realize some rent is better than no rent, even if it means they are going to take a loss.
Then rents start dropping back to earth.
I can't tell you how much that cost us because people would just go next door, get a small bottle of something for cheap, down it while they were out on their smoke break and then come back to the show in my place.
It really sucked honestly.
But, yeah, it can be harmful like that or positive in that maybe there are restaurants next door where people eat before they come to your bar for drinks and a show.
I feel like these sorts of things are part of "being more productive" though. Having a good rapport with your co-workers, having a chance to talk about side things, having a chance for people whose domains don't normally cross to hear what's going on elsewhere. These are all parts of being a well functioning and productive team. It's a real shame that larger organizations tend to lose sight of that, but it's also a shame in my opinion that this whole fight over remote vs in office work has gotten the workers pretending that nothing but the numbers matter. This really feels like a "be careful what you wish for" moment.
Yeah.
There are some things which can be more difficult when you’re remote. Working through a design—it’s so much better when you have two people in a room with a whiteboard or paper. Onboarding. Going through a gnarly code review (where you really want some major changes to the code before it gets shipped). Debriefing after a meeting, where you and your teammate know that the meeting was a complete waste of time, but you need a chance to kvetch about it offline and off the record.
Every-time I am in the office I remember a scene from the west wing where the quote is "He thinks decisions are made in meetings...." expressing that most decisions are made in informal discussions in hallways, or impromptu mini-meetings standing in someones office door. Meetings are where we tell everyone the decisions that were already made
It is hard to replicate that in a remote work environment, maybe that is better I dont know, but for I see the advantage of both
This is why we've switched to a full week every month, which amounts to 1 - 1.2 days per week of presence. This week is used for planning, discussions, more complex knowledge sharing. We've just found it more effective to plan some things with post-its and a whiteboard. Sure, things like Miro exist, but if you combine the friction from the wonderful video call solution teams, miro, microphones, internet uplinks and such, it becomes a real distraction.
But yeah, during these weeks, we don't do much technical work beyond keeping the lights on and pushing the simple service requests through the queue.
While we'd spend time working, we'd also plan things like field trips (hiking, kayaking, museum visits), we'd go out and get lunch and dinner, bring our Switch consoles and have Mario Kart tournaments in the conference room, and other things like celebrating birthdays, births, anniversaries, and so on.
For remote teams, using the together time to focus on productivity and work is a broken model. Glad that your founders get it!
Every other reason eventually boils down to this very point.
Turns out, specialized districts were a massive city planning mistake.
And these days state laws and building codes do much to prevent these anyways.
I searched for Whole Foods locations and they seem to have about 13 in Manhattan itself. There’s a Costco in Manhattan. And there are several other major grocery stores some unique to New York. There are also large independent grocery stores and independent online grocery stores that will do hourly deliveries (the 15 mins deliveries thankfully seem to have largely died out).
And that’s before you get to the hundreds of farmers markets.
And how about all the butchers, seafood stores, cheese shops, spice stores, etc.
And then you get the international grocery stores with Korean, Japanese, Indian, Chinese grocery stores.
Ah, and you have 24/7 bodegas on newrly every corner if all those don’t work for you.
They work in Manhatten because of population density, the grand parent clearly said they do not work in "spread out neighborhoods"
So now we are shifting the goal posts from "walk-able neighborhoods" to walkbale high density neighborhoods. Not only do I oppose walkablity I also oppose High Density, I like my Single Family home on .75 acres of land or less.
I do not want to live stacked on top of others, if you want that stay in NYC. thanks
as do most people that live in the suburbs which is why suburbs are not "walk-able" because people leave the cities to escape walkablity
I dont want to walk anywhere but from my front door to my car
Neighborhood stores will not have the volume to support a 100-300,000 sqfoot store, with all the selections I get at my local supermarket that services many many neighborhoods
There’s a lot in between those two extremes.
My favorite neighborhood I’ve lived in was on the Northside of Chicago where I had a medium-sized, independent grocery down the block on the local arterial road and a neighborhood of single family homes in the blocks surrounding it. The arterial roads have commerce, and the side streets have homes. You can walk, you can drive, take transit.
> I dont want to walk anywhere but from my front door to my car
I’m sorry for you.
I don’t see any cement plants in Manhattan and I don’t think many cement plant employees work remotely.
Isn't this a problem even for coming into the office 2 days a week?
My experience is that I work on a team which is really distributed. We have people in nearly every continent (including Africa and South America, but not Antarctica), so getting to an office 2 days a week is not an option. We have regular video conferences though.
I presume the interactions and such you describe increase your net productivity, much as taking the time to study something does. Neither show up directly in Taylorist metrics like “PRs closed”
As an autistic person with ADHD, office environments are 'difficult' to say the least. Thankfully I've been fully remote for about a decade as well. Wouldn't go back, and thankfully I don't need to. There are plenty of remote jobs available and I don't see that changing short of some type of short-sighted government regulation.
Smaller companies have realized that office space and the infrastructure to support it is a huge money sink compared to just having employees work from home.
I make sure to socialize on zoom in every call, my focus is through the roof as well as my productivity.
They sound like great leaders. I also work for a great company which is very pro-remote work.
I have been working from home for several years before pandemic. I lived near office, so every once in awhile I would go in to take a break from programming and socialize. It is great for those purposes especially once you are out of college, it is really hard to make new friends. And this is the one aspect about office work that I miss. But it is not a company's job to provide friends.
Also I realized people who lacked real skills but were good at socializing were the ones who went to office often and they were the ones who were climbing corporate ladders faster.
And I have tried hard to understand why return to office is good for business but don’t see any point. Only explanation that makes sense to me is that people who are good at politics are having hard time playing politics in remote world. They have no other skills, technical or business. But they have already climbed corporate ladder and feeling powerless. Now they need people in offices for their personal benefits, not for company’s.
Everyone seems from out of town. Or if they live nearby, just downtown for their teams onsite.
It’s like a decrepit city district that exists for the sole purpose of flying people in to meet in person. Less a thriving center for tech. More a default place for leadership to get everyone together.
Obviously the vicious cycle of nimbyism, lack of affordability, and homelessness only continue a downward spiral that existed pre pandemic. But there doesn’t seem to be a lot of original thinking on a solution other than “get people back to offices” from those that CAN afford to live nearby and pretend the world hasn’t changed.
Right. In which case you may as well meet at an airport hotel with good meeting rooms.
Maybe there is a market for that. Repurpose under-utilized indoor malls as business conference centers where teams meet once or twice a week. Malls have plenty of space, plenty of parking, good HVAC, food facilities, and some shopping. All you need to make an unused store into a meeting space is furniture.
I called my local mall to use their little event space (think 60 folding chairs and a podium in a 900 sqft box). No call back.
I am continually surprised at how hard it is to find a place to hold a small meetup in the evenings
not something you'd use for formal business meetings, but definitely hackable up as your budget allows
I'm not finding in-office work productive for the in-office meetings. Those are just as productive remotely.
It's for the hallway conversations, for pair-programming at someone's desks, for grabbing lunch with another senior technical leader on another team and finding out what they're up to, and bonding such that the next time we need to integrate we are automatically looking to fast-track helping each other out.
This requires a sense of place, comfortable vibes, and a pleasant lunch location with good food.
Call me spoiled, but an airport hotel and a buffet table just won't cut it.
Our industry's problem is that the low-EQ engineers have no interest in any of the human elements that make teams and organizations productive. And the only ones around with high-EQ are the VC's who are blinded by the dollars and cents of it all.
So noone REALLY has a vested interest in understanding what we lost when we went all remote during COVID, and what are the minimal elements from it required that are needed to be brought back.
Japan Airlines recently launched a "rent clothes" offering for overseas travelers.[1] This would dovetail nicely with your idea of meeting at an airport hotel with great conference rooms.
https://sfbay.craigslist.org/sfc/apa/d/san-francisco-large-t...
The last couple of offices I've seen just have terrible equipment. This of course could just be my own anecdotal coincidental experience or just me being picky, but I do wonder if it's actually, at least in part, due to companies just not giving two sh*ts about equipment because fewer and fewer workers are actually going into the office.
If that hypothesis is true, then it's a really vicious and rapid positive feedback doom-spiral: worse equipment -> fewer on-site workers -> less motivation for better equipment -> even worse equipment -> even fewer on-site -workers...
...repeat ad nauseam.
Also, slightly tin-foil-hat-like (however I bet many will relate), but in the country I'm currently living in (UK), the government sold off all of the transport services to private soulless demons and political cronies, causing a runaway price surge that means a yearly pass for one ~30 minute route is >£5,000 (around $6,000?).
So, yeah, each on-site for me equals getting scammed by profiteering demons, having my back eviscerated by the knock-off-of-a-knock-off of a Herman Miller that has foam crushed into a slab of diamond, spending 30 minutes finding a HDMI/whatever cable, and of course losing 1-2 hours of my life to transport there and back.
Nah.
EDIT: What would make on-site a viable possibility for me would just be: Nicer transport (e.g. >70% chance of seat, instead of 1E-300% chance at the moment), cheaper transport, and better equipment.
EDIT2: I forgot biggest on-site downside of them all: bad tea and coffee :P
Anyway, it’s still shuttered, so good luck with that plan.
Find one that's willing to have a Spirit Halloween store in it and you might find them more receptive.
In Germany, I note that thousands of small businesses flourish that vanished from London’s streets - I have a choice of places to have a kitchen knife sharpened, for example - and while London holds vast opportunity, I fear that its breadth is severely constricted and whole areas of industry, skills and expertise are effectively extinct as the startup Capex is too high, and the Opex is vampiric.
And it's hard to counter-act in high-density areas; without deliberate action everything becomes McDonalds or financial businesses.
Maybe that's a good thing, as it will make NYC affordable, but NYC is also experiencing huge budget shortages from the drop in land value. I suspect these will only get worse over time in all major U.S cities.
I moved to a smaller (population 600k vs 1.7mln) city and my salary didn't change much working remotely, while costs, especially real estate, are approximately 30% lower.
All my friends who stayed there did so simply because they had someone to finance their housing.
However living in the same city is only one aspect of substitutability.
There’s also specialized skills, organizational tenure, time zone, how easily legally a company can hire in a country, language barrier and many others.
Demanding remote only invites remote talent from anywhere not just for existing employees
All the bullshit about co-location and productivity is dropped instantaneously when there is a chance of saving a dime.
The flat out truth is that the off shored teams are either good enough to do the job (they they have the job already, or would have in short order remote or no) or they aren't.
I agree that low cost onshore locations are likely to benefit, and wages will be lower there - this is a good thing for the developed economies though. I am in the UK and there are many cities that have complex and extensive infrastructures that could be a great place to live. These would benefit hugely from even 250 remote working IT people going to the restaurants, sending their kids to the schools, showing up to local events and so on. The IT folks would (and are) benefiting from not sitting on the Tube for 1 1/2 hrs a day and not having to work in the chaos and bullshit of a London office.
The trade off is worth it. London will be ok as it was literally bursting before Covid, I think that about 2x the people will have a job "there" in the long term.... showing up for 1 or 2 days a week and then retreating to the NORTH...
It depends on the type of business you're in. If you're working for a large multinational that's doing "commodity web" type work, then yes, remote work probably does make you more replaceable. Fortunately this is not the totality of the job market, although, their monopoly status does seem to help make them the majority of it.
Mid sized companies don’t really have experience or know how to hire internationally.
Big companies have know how and resources yes but your average Joe CEO is going to be terrified of it as he won’t have control over it and he has already enough stuff to do locally to keep company running and he can hire Elaine as HR and Jeff as manager and they will know how to deal with Ashton and Jimmy who live in the same state so our Joe CEO will have less worries - which in turn translates to less money wasted by company even if some devs would be cheaper on monthly salaries.
[1] https://www.forbes.com/sites/jimscheinberg/2023/07/26/dont-l...
"For an office landlord, abandoning a building can be the best of bad options. Commercial mortgages on offices are usually structured as “nonrecourse” loans, which means that only the building is forfeited in a default. "
https://www.curbed.com/article/nyc-office-real-estate-rechle...
This is a great article on the situation in New York, I highly recommend it.
Commercial real estate landlords keep saying that, in hopes of a bailout. Whether it's a real problem for banks remains to be seen. It's a slow problem, and banks can generally deal with slow problems.
SF office space is going to get crushed. Most other places will partially recover.
My small, east coast college town has a YIMBY oriented movement for more affordable living options.
(and a homeless problem https://www.cvilletomorrow.org/newsletter/the-number-of-peop...)
Our zoning is stuck in some old NIMBY ideals and is really hard to change. Development of new projects is stalled. Housing is more expensive than ever.
> Shelter workers say there are many reasons more people might be seeking shelter this year. One is that inflation is making it difficult for people who earn low incomes to afford their homes.
The AC has been out for two weeks. Not at all saying we should let office buildings stay vacant, just, never considered how much it would suck to not be able to open windows.
https://fox8.com/news/unbearable-residents-in-lakewood-high-...
> unfortunately modern HVAC systems work off a computer motherboard. Apparently, through zero fault of ours, that motherboard was fried by an electrical surge.
Moreover, there are many urban downtowns that don’t “suck’, such as Boston and NYC that are still facing a challenging commercial real estate market. Additional residential in this metros will be quickly snapped up and drive demand for nearby offices.
Often it involves something like building a stadium or convention center or other attraction, which makes dwelling units nearby desirable.
San Diego's gaslamp quarter is an example.
Detroit's problems aren't locational, they're otherwise (as can be seen by the cities that are (technically) not Detroit but right outside it doing pretty well.
However, in the few years before Covid there were more spaces advertised than there are now, and that number went up a little in 2020. But now, there's not much on the local the market, even tbough I can see plenty of empty buildings when I walk around.
We have a lot of landlords here who, I'm told, don't care that much about the rent, which is also why they don't try particularly hard to entice tenants. It can be remarkably hard to rent a space even when it's been empty for years and advertised as available, as the agents come up with all sorts of reasons and incompetencies. I am part of an organisation that tried to rent a business unit that was advertised and which we'd been enthusiastically shown around, and after a year of trying we gave up on it because we just couldn't get sane responses from the agent. The unit was still empty when we gave up on it.
There are quite a few that are not advertised but have been empty for years. Some of those are actually available, but you have to talk with property agents and ask for the lists of properties they have on file which are available if you really want to pursue them, but are not advertised. If you don't know, you don't know.
I currently rent a small office in a larger office building. The rent I'm paying is relatively low for the area, but it's inching up citing "market rates", i.e. high, even though most of the units in the building how now been empty for multiple years.
The property agent told me my particular landlord doesn't really care about the rent as they have other long-term plans for the building. So it's disappointing they still charge as much as they do for that rent they don't really care about. I'd love to take the empty unit next door to expand my office; it's likely to remain empty for another year anyway.
I was told a few years ago, before Covid, this dynamic is for two reasons. (1) The big landlords often prefer to hold out for a large, higher-paying tenant with a long lease, even if it means no rent for a year or two by turning down lower-paying tenants meanwhile. This makes little sense to me as they could presumably offer flexible terms where they can give notice at any time, but hey I'm not a landlord. And (2) some of them intend to wait for the building to be empty for long enough (20 years) that they eventually obtain automatic permission to demolish the building and replace it with a new build, either apartments or a new building with more floors and maximum footprint. I don't know if either of these reasons are true.
Done and done.
The USA needs State-based Socialism and not this consumeristic crony capitalism that is killing our humanity in every respect. Global socialism is just other countries stealing from each other and calling it equity. Strong nations are the basis for production and when incentives don't exist to engage people in those nations because of international influence, money, and elitism the outcome is stagnation and degradation of the system.
Real estate speculation has gone absolutely wild over the last sixty years as the Federal Government, the Federal Reserve, and its agents, sit on hundred of millions of acres of livable land, and hundreds of thousands of homes, as a means of maintaining investor value. Which is a complete affront to social government and the purpose of this nation - the ability to choose how we live.
None of us choose this save for the inheritors of massive capital who are generally "citizens of the world" because they are liquid enough to owe no loyalties. This has to end.